New York County District Attorney's Office Announces Separate Criminal Plea Agreement

FOR IMMEDIATE RELEASE
2007-20

Washington, D.C., February 14, 2007 - The Securities and Exchange Commission today simultaneously filed and settled civil charges against Ryan Ashley Brant, formerly the Chief Executive Officer and Chairman of the Board of video and computer game publisher and distributor Take-Two Interactive Software, Inc. (Take-Two), alleging that during a seven year period, Brant enriched himself and others by granting undisclosed, "in the money" stock options to himself and to other Take-Two officers and employees.

Without admitting or denying the allegations of the Commission's complaint, Brant consented to the entry of an order permanently enjoining him from violating or aiding and abetting violations of the antifraud, reporting, record-keeping, internal controls, and securities ownership reporting provisions of the federal securities laws and permanently barring him from serving as an officer or director of a public company. Brant has consented to disgorge ill-gotten gains of $4,118,093 with $1,143,513 in prejudgment interest, and to pay a $1,000,000 civil penalty, for a total of $6,261,606. The settlement is subject to the approval of the United States District Court for the Southern District of New York.

Linda Chatman Thomsen, Director of the SEC's Enforcement Division, said, "As the Commission has alleged in its complaint filed today, the backdating scheme at Take-Two, which spanned seven years and was at Brant's direction, resulted not only in millions of dollars of ill gotten gains, but also caused Take-Two to materially misrepresent its financial condition to investors. The Commission's commitment to protecting the investor requires us to address vigorously undisclosed options backdating wherever and whenever it arises. Our action today sends the message that we take our duty very seriously."

Christopher Conte, an Associate Director in the Division of Enforcement, said, "The complaint alleges that Brant, with the participation and knowledge of senior executives and others at Take Two, looked back and picked grant dates to coincide with historically low prices, and that he did so, in virtually all instances, without Board approval for either the grant dates or exercise prices. This case highlights the need for public companies to ensure that their internal controls and oversight structures are adequate to prevent stock options from being granted in ways that are contrary to shareholder approved option plans."

The complaint alleges that from 1997 through September 2003, Brant, with the participation and knowledge of senior executives and others at Take-Two, looked back and picked grant dates for the company's incentive stock options that coincided with dates of historically low annual and quarterly closing prices for Take-Two's common stock, resulting in grants of "in-the-money" options. Brant and others at Take-Two referred to this practice as "pick-a-date" option granting. According to the complaint, Brant granted options to himself and others at Take-Two without complying with Take-Two's stock option plans and, in virtually all instances, without the Board or a Committee of the Board approving the grant dates or exercise prices. The complaint alleges that at Brant's direction, Take-Two officers and employees prepared documents falsely indicating that the option grants had been made on earlier dates when Take-Two's stock price had closed lower. From 1997 to September 2003, Brant awarded himself ten backdated option grants, representing a total of approximately 2.1 million shares of Take-Two common stock. Brant exercised all those options before resigning from Take-Two on Oct. 16, 2006.

The complaint further alleges that because of the undisclosed backdating scheme, Take-Two filed with the Commission quarterly and annual reports, proxy statements and registration statements that Brant knew, or was reckless in not knowing, contained materially false and misleading statements concerning the true grant dates and proper exercise prices of stock options, and which misled investors to believe that stock options were granted in accordance with the terms of the applicable stock option plans. According to the complaint, Take-Two materially understated its compensation expenses and materially overstated its quarterly and annual pre-tax earnings and earnings per share in its financial statements. Take-Two has announced that it must restate historical financial results for multiple years in order to record additional non-cash charges for option-related compensation expenses.

Separately, the New York County District Attorney's Office today announced that Brant has pled guilty to felony criminal charges of Falsifying Business Records in the First Degree and agreed to pay $1 million in lieu of fines and forfeiture, which will be distributed to state and local New York authorities.

Brant previously settled with the Commission for his alleged role in a massive financial fraud at Take Two in 2000 and 2001. On June 9, 2005, the Commission filed and simultaneously settled civil charges against Take-Two, Brant and other members of senior management in connection with an alleged $60 million video game parking scheme. SEC v. Take-Two Interactive Software, Inc., et al., Civil Action No. 1:05-CV-5443 (DLC) (S.D.N.Y. 2005) (filed June 9, 2005), Litigation Release No. 19260. In that action, Brant was permanently enjoined from violating and/or aiding and abetting violations of the antifraud, reporting, record-keeping, and internal controls provisions of the federal securities laws; barred from serving as an officer or director of any public company for five years; and ordered to pay disgorgement of $2,490,408, prejudgment interest of approximately $613,000, and a civil penalty of $500,000.

The Commission would like to acknowledge the assistance of the New York County District Attorney's Office, which conducted its own separate, parallel investigation.